Articles

Some of my low years have been so deep that I arguably really should not have continued my solo practice. While the high years generally made up for it, that wasn’t helpful when in the middle of those low points …when I really needed to pay myself a living wage (not to mention my overhead).

There are numerous ways to maintain a baseline of revenue. One way I’ve found sustainable income is retainer arrangements, which work well for the types of clients which benefit from being able to periodically access me for advice and small requests, and which desire priority access to me when something important and urgent arises.

I happen to like recurring revenue because it reduces my ongoing sales and marketing needs (to an extent) and makes my short-term cash flow more predictable. This frees me up to serve my clients, to pursue newer (more risky or less predictable) business opportunities if I so choose, and helps stabilize my income in a way that I haven’t been able to meet through any other technique.

I also personally prefer it because I like to work with the same clients over long periods of time, and retainers focus my energy on those types of clients.

Retainer arrangements are like Membership offerings — Only Better

I view retainer arrangements essentially like a paid membership offering — only better. Membership has its privileges (that is, after all, why someone joins) and in and of itself — with some creative thinking — you can create something valuable to your types of clients.

But even more interesting — each individual arrangement can be customized — one can tune the specific benefits and specify other perks that are appropriate and valued by each individual client in question. Costco can’t do this. You can.

This increases value to the client. This, in turn, increases conversions of proposals into sales, better retention (renewals, which decrease time devoted to sales and marketing and increase your operating profitability), and boosts what you can charge. Win-win!

Payment Terms

My retainer arrangements are typically one of monthly, quarterly, or annual. I automatically invoice at an appropriate point near the end of the current period for renewal. I also require a heads up a reasonable period prior to renewal if the client won’t be renewing.

One difference between retainers and other types of work, is that full payment is always required prior to each period — not during or after. This is important, as it’s helps justify the discount you’re effectively offering in exchange for your receiving prepaid guaranteed income; this goes away if you bill after the period is over.

How to start offering retainers

I got my feet wet with retainers by offering them as an optional add-on to existing client projects at proposal time. I spent time thinking about each project and determining where there was value-add to ongoing follow-up of some sort. Not everyone went for it, and some projects were better fits than others, but enough did… until it donned on me I could make this a central part of my practice not just a small revenue bumper tool.

I suggest this route because it allows one expand their comfort zone in a low risk manner, without scaring off clients or cannibalizing existing business. And, over time, it’ll give you a better idea of which opportunities make the most sense to explore and which clients really see the value in this sort of arrangement (many clients won’t and that’s fine).

What to include in retainers

This is really something that you will know best as you know your specific types of clients best and your market. Here are some suggested places to look for ideas that worked for me:

Look at past project proposals and ponder what types of add-on or ongoing value-add offerings might have been appropriate

Look at existing projects in progress and do the same

Chat with clients about their ongoing non-project needs.

Brainstorm ideas, even ones that sound far-fetched and commit to selecting one or more of them to tack on your next few proposals as optional add-on offerings. Ask for feedback after proposal acceptance, from those who did not opt for it.

Should project work ever be included in retainer arrangements?

Should project work ever be completed as part of a retainer arrangement? That depends on your goals. Some of my retainer arrangements have been about establishing predictable income and basically are designed to be cash cows for me, albeit heavily discounted versus if I’d performed the same duties on a project by project basis. I was willing to accept this because my priorities were different at the time. There’s nothing wrong with this, but know why you’re doing it if you do it.

Most of my retainers include a discounted rate for project work, applied either to my hourly rate or to my quoted fee for any future projects we do together during the term of the retainer arrangement. The client will still be paying separately for the project work, but gets a discount in recognition of their membership status.

Final thoughts

I think retainer arrangements are a good component of a well rounded solo practice. They bring additional value to clients, encourage long-term client relations (leading to more project work), often can make project work more successful (by incorporating ongoing maintenance and adjustments), can reduce firefighting (by encouraging reaching out for advice and assistance with small tasks), and can bring stability to our cash flow and income.

One of the biggest reasons prospective clients don’t proceed with a project after having you provide a thorough proposal is because they are concerned about their options if you mess up. Take that risk away: Offer a strong guarantee. Here’s how I do it in my consulting practice.

Something like this will do:

The quality of my work is guaranteed. If you do not believe I have met the mutually established objectives for this arrangement, I will continue to work toward those goals with you for no additional fee. If, after such an additional attempt, you still believe I have not met your objectives, I will refund your fees in total.

I borrowed this idea from Alan Weiss years ago, include it as boilerplate in every proposal letter, and haven’t looked back.

Is the above scary? Are you taking on more of the risk? Yes. That’s why it’s powerful.

Do you have to use exactly this language if it makes you too uncomfortable? No. But make sure you pick something that makes you a little uncomfortable. Otherwise it’s meaningless and not compelling. And therefore not of value.

(Also, you’ll have to adjust the language if your projects aren’t fixed fee — like mine predominantly are — but the spirit can be similar.)

Not incidentally, offering a compelling guarantee is also justification for charging higher fees. Accepting risk — taking it away for the client — has value. Clients aren’t simply paying you for your advice or your labor, but everything you bring to the table.

If accepting this level of responsibility for your work isn’t acceptable to you, that’s fine. Just expect to close fewer, smaller, and less profitable deals. Which is fine if it helps you sleep better.

But I sleep better doing things this way[1].

[1] You don’t have to go crazy. Try it on a proposal or two and see what happens.

I could make this article very short with the smug answer: “Just ask for it.”

But I know from real world experience that the more accurate answer is it’s both exactly that simple and, at the same time, not just that easy.

How much do you ask for? When do you ask for it? How do you ask? How do you make it in the client’s interest? How do you deal with objections?

How much you can ask for:

A portion of the fee upfront.

This one seems obvious to me now, but I went several years before I moved beyond the “work a bunch of hours then send an invoice and wait” model. You can do this whether you are fixed fee or hourly, basing the latter on an estimate. It did wonders for my cash flow, for my scheduling, and for eliminating clients (or worse, prospects — i.e. folks I’d never worked with at all before) that would say “Let’s do it” then drag their feet or expect me to move quickly to do my thing for them, but then would take forever to pay me for my promptly completed work.

The entire fee upfront.

You’d be surprised how acceptable this becomes once you simply start making it your convention. And, really, it’s not all that strange when you consider that you can’t drive away with a car (or even walk out of Walmart) before paying for your purchase, as well as the fact that in most cases you are taking on greater risk than the client is by working on a project for a client for a few weeks or months with only the “hope” that you’ll get paid at the end. You are a freelancer, not your client’s banker/lender.

When can you ask for it:

After you’ve set your fee (but not a moment before).

When you get paid is a discussion about payment terms, but not about your fee itself. I learned this from Alan Weiss. I don’t discuss payment scheduling until at the very end of my full proposal. The easiest and most seamless way to do this is to require payment as part of proposal acceptance. That is, nothing means anything until a check is in hand (you can’t deposit a signature and people can drag their feet even after signing agreements).

How you can ask for it:

At the end of your proposal.

A simply line or two entitled payment schedule or payment terms, at the very end of the proposal (after fees have already been stated), right where they are expected to elect any options and accept the proposal. My favorite way to do this (and what is in every proposal I send out) is an approach I borrowed and adapted from Alan Weiss is to require signature to proceed and to make payment equivalent to a signature:

Upon your acknowledgement I will provide an electronic invoice once you’ve made me aware of which options you prefer and if you wish to take advantage of any of the discount payment terms, which may be paid online or by check. Once accepted, all payments are due in accordance with the payment schedule above.

Your choice of option(s) and your signature indicate acceptance of this proposal as discussed and described above (in the absence of your signature, your payment also will indicate acceptance of this proposal).

With a discount carrot.

I routinely offer a discount of 5% to 10% for receiving full payment upfront (sometimes up to a year ahead). And no discount (or a smaller one) for receiving no or only a partial payment upfront. As a bonus, some organizations are required to take these discount terms when offered.

Offer different payment terms depending on the option chosen.

In nearly all of my proposals I give the client several options for achieving the agreed upon objectives, each with varying levels of risk, speed, client involvement, etc. This makes it easy to also associate different payment terms which each option. For example, for lower end (and generally lower fee) options I usually require the full fee upfront. This is justifiable because part of the way I’m able to offer a cheaper option at all is because I get paid upfront for it — i.e. it offers lower risk for me so I don’t need to get compensated for taking that risk, while for higher fee options I am more flexible — i.e. 50% of the fee upfront and the balance in 30 days.

How to handle objections:

Offer a strong guarantee.

One of the biggest reasons clients don’t like to pay upfront is because they are concerned about their options if you mess up. Take that risk away:

The quality of my work is guaranteed. If you do not believe I have met the mutually established objectives for this arrangement, I will continue to work toward those goals with you for no additional fee. If, after such an additional attempt, you still believe I have not met your objectives, I will refund your fees in total.

Make sure it’s really payment terms being objected to.

I never negotiate fees. I only negotiate two things: payment terms and project scope (which for me primarily entails engagement objectives and implementation approaches). This makes it important to distinguish between whether the objective is about the payment terms or about project value. The former is a very different discussion from the latter.

Be willing and flexible when it comes to negotiating payment terms (but not fees).

It’s okay to negotiate payment terms. I suggest that if it seems like you can’t get anything at all upfront, that you tie the first payment to a meaningful, but fairly minor milestone. As soon as the first payment is actually received, the remaining payments are far more likely. And your only concerned with payment terms for two reasons: to manage your cash flow (i.e. sooner is better; some is better than none) and to minimize your risk (i.e. of non-payment, of slow payment).

If you enjoyed this, I suggest you check out the book Value-based Fees by Alan Weiss.

My first experience with a shuttle – an open house at Vandenberg Air Force Base, Lompoc, California in November 1984. Fittingly it was also the very first Space Shuttle built.

(Click for full size view) The tall orange jacketed man is my dad and I’m holding my dad’s hand in the blue jacket. All of 4 years old. My mom and younger brother, Joe, only 4 months old, were behind the camera. I have no idea who the guy looking at the camera is.

Sadly, I have no memory of this first-person view, but I was a devoted fan of space exploration and science from my earliest memories not long after that. And even my earliest memories of computers, and inter-connecting them, involved NASA (I remember, specifically, how I thought I could access NASA computers, even before I owned or even knew what a modem was. Not sure why I wanted into their computers, but it made sense at the time.)

These are the techniques I’ve found most effective to get paid fast when doing technology freelancing.

1. Ask for a portion of the fee upfront.

This one seems obvious to me now, but I went several years before I moved beyond the “work a bunch of hours then send an invoice and wait” model. You can do this whether you are fixed fee or hourly, basing the latter on an estimate.

2. Ask for the entire fee upfront.

You’d be surprised how acceptable this becomes once you simply start making it your convention. And, really, it’s not all that strange when you consider that you can’t drive away with a car (or even walk out of Walmart) before paying for your purchase, as well as the fact that in most cases you are taking on greater risk than the client is by working on a project for a client for a few weeks or months with only the “hope” that you’ll get paid at the end. You are a freelancer, not your client’s banker/lender.

3. Set expectations upfront.

If the buyer can make the full investment decision upfront, rather than hope or guess, it’s easier to get paid faster. A lot of delayed payments are really because the buyer is disappointed with either the fee, the value, or the result. If your fees are fixed and thus entirely set upfront, this is easy. If you charge hourly/daily/weekly, estimate conservatively and… see the next item.

4. Offer compelling value.

I prefer to not only discuss the project upfront, but to then come back to the client with a written summary (which ends up being the proposal). The summary is in my own words but drawn entirely from our discussions. It contains, at a minimum, with a nod to the value-based fee model taught by Alan Weiss:

The situation appraisal

The business objectives (outputs/improved conditions) tied to the work

The believed value of the work (business-wise and sometimes personally and professionally for the buyer)

The implicit or explicit metrics or indicators of success for the work against the objectives

In this way, the buyer and I don’t proceed until there is a true “meeting of the minds” over the value of the work. It’s easy to get into a discussion about the inputs (tasks), but the real value is in the results. The better understanding I have of the ideal result that the client has in mind, the closer I can tie my work to compelling value. And the happier the client will be to pay, period.

5. Constantly communicate.

You know when you should be providing updates. Generally it is whenever you’ve promised to, just before or after major milestones, when there are hiccups that may impact scheduling or results, or any other time you know you should but are avoiding doing so only because you are concerned about the reaction. 🙂

6. Meet commitments.

If you make a promise, meet it. Simple, but not always easy. If something isn’t going as planned, just communicate that and adjust. Unless you make a pattern of it – or don’t learn from your mistakes – it’ll be probably okay.

7. Use plain language. (Avoid legalese.)

Don’t create proposals that require legal departments / attorneys to get involved. And if you can’t avoid it entirely, keep them sane. Business is risk.[1]

8. Make it easy to pay you.

Accept checks, eChecks (ACH), and all major credit and debit cards as well as, if possible, via multiple processors. I accept payment via PayPal, Google Checkout, and Stripe. There is overlap between these, but every buyer/client has their own favorite service. I don’t care which they use, just as long as they pay as promptly or – preferably – as rapidly as possible.

If you are concerned about paying 2% to 3% on credit card transactions, you are overlooking that you are in a high margin business. Paying 3% on credit card transactions will make you cringe sometimes, but don’t overlook the big picture. You are providing a service with an 80%-90% profit margin. And, having money in your hand – rather than “in the mail” – is the difference between an actual sale and just talk. It’s also the difference between putting food on the table and starving waiting for money to arrive in the indefinite future.

9. Follow-up when a payment is late. Do so immediately and in a professional, consistent, and assertive manner.

I suggest clear language that doesn’t whine (it’s not their problem you can’t pay your mortgage, but it is their problem they are failing to fulfill their commitment). I prefer automated follow-up so that it always happens, otherwise I will put it off. Most on-line invoicing solutions can be set-up to do this automatically for you after a configured number of days.

10. Always make payment arrangements and discuss payment problems with your buyer (the decision maker / business sponsor), not the client’s bookkeeper or accounts payable department.

The buyer can escalate, assert their authority, and negotiate when there are problems. They are also the one who is impacted if a missed payment results in a project delay. The A/P department on the other hand isn’t any of these things.

11. Generate professional invoices that are easy-to-read.

They should clearly describe the work, account for every hour (if you are billing for time), and reference the project, proposal, and buyer clearly. Make them very simple, without any extra language or legalese.

12. Send invoices in a timely manner and do so consistently.

Immediately upon gaining agreement on a proposal. Consistently at milestones or the agreed upon dates. If possible, generate and schedule delivery ahead of time. If a series of invoices is likely, you can even provide them all upfront with rolling due dates, if that seems like it’ll be helpful.

13. State a late fee on every invoice generated that applies if it is not the balance is paid in a timely manner.

Pretty self-explanatory. A flat fee or charging interest are fine, but if the latter make sure you understand usurp your state/country specific restrictions on charging interest.

14. State all invoices as being “Due upon receipt.”

If you learn an organization is taking advantage of this phrasing to not pay within 7-10 business days, change their next invoice to be “Net 15” (due in 15 days). If they can’t pay on time, tell them to use a credit card.

15. Offer a small discount for pre-payment in full upfront.

I always ask for a portion of the fee upfront for every project, while offering a small discount for pre-payment in full upfront (in the 5% to 10% range). For projects I consider to be relatively small (e.g. <$5,000) I don’t offer a discount, but outright require full payment upfront.

The Situation

You, or your organization, has a critical load and has also gone to the trouble of spending the money on investing in a generator backup power source for it.

The Objective

This is simple enough: keep the power on.

The Problem

A local newspaper reported on a sewage spill in the county I live in:

About 20,000 gallons of sewage spilled from the California Men’s Colony prison at 4:10 p.m. Sunday when power was lost and an emergency generator did not start. The sewage flowed into Chorro Creek, which flows into Morro Bay.

The fault was apparently that the generator did not start after a utility power failure:

“The power failed and then our backup generator failed, so it was kind of like a double power failure,” said Mike Minty, chief engineer at the prison’s waste water treatment plant. “It’s all fixed now.”

If you operate a data center or critical facility that has a power generator, there are some very easy pro-active actions that can be taken to mitigate the most common problem I observe: the generator fails when the power goes out. For most, that’s not the hoped for outcome of the capital they’ve invested in making their facility more resilient to utility power outages.

While there’s always a possibility that shit this can happen even if various preventative actions are taken, the chances are far lower if a handful of items are paid attention to. I am not privy to the maintenance procedures at the California Men’s Colony waste water treatment plant, so I’m just using their outage as the thought provoker and not judging them.

The Cause

When a generator “simply does not start”, rarely is that the entire story. Rather than being the root cause of the outage, it’s the manifestation of the maintenance and monitoring practices.

In my experience it’s usually a symptom of a lack of a pro-active culture surrounding the backup power system. Sadly, some organizations that invest large sums of capital into their backup power systems (and, presumably, whatever the critical load is they are protecting), don’t factor in proper operational costs and fail to implement appropriate procedures to see to it that appropriate preventative work is performed. This diminishes the return on investment on the capital invested in the entire system.

The failures then flow through to two areas:

Maintenance

Monitoring

The usual failure scenarios are one or more of:

Generator fails to start (common)

Generator starts, but fails under load (common)

Generator starts, but no power reaches the critical load (less common)

The end result is the same: the critical load loses power.

The Solution

In the case of a generator, here’s the practice I’ve learned to follow:

Weekly no-load automatic tests (usually this can be programmed into your automatic-transfer switch)

What this verifies:

basic generation functionality

control functionality from the ATS to the generator (a simple cabling problem between the ATS and genset, even if both are completely operational and test out fine, can ruin your entire day)

physical inspection of generator, looking for unusual sounds or animals that have crawled inside of it (I’ve had cats inside..)

Costs:

Junior technician or facility maintenance person, approximately 15-30 minutes one day per week

Risks resulting from implementing this procedure:

Nil. Won’t have a real load on it. Nothing will be disconnected during the test.

A risk is that this procedure isn’t completed every week. I suggest requiring a small checklist report to be filed each week with a colleague or supervisor (and making sure they know to expect it so that if it doesn’t come they go in search of a reason why) to make sure something isn’t missed just because somebody “got busy”, was out sick, went on vacation, etc. To verify it was really done and not just filled out paperwork, listen for the generator tests (duh!) and have the run hour meter reading from the generator be one of the fields filled out (which should be going up every week).

Monthly (or Bi-weekly) Manually Triggered Actual Load Tests

Verifies:

Takes the place of the weekly no-load every fourth week

Mechanical functionality of the ATS

Electrical functionality of the ATS

Real functionality of the generator (many problems do not manifest themselves when the generator is running without a load or with only a very low load)

That the facility is not exceeding the capacity of the generator (doh!)

That there aren’t some weird charactistics of the load or the backup power system that are interacting in a way that will lead to power loss

Risks

If you do not have UPSes for computer systems and other pieces that can’t lose power for even a few seconds, which are in turn fed by the generator, plan accordingly how to do this type of test. For a data center with UPSes, a monitored test can be performed. The worst that occurs if there is a failure should be a very brief loss of air conditioning while you switch back to main power so you can isolate what went wrong. Computers should run from the UPS batteries briefly.

Yearly (or Quarterly) Dummy Load tests

What this verifies:

Often the generator will not be under 100% utilization, even during the monthly actual Load tests. Some generator problems will not manifest themselves except under heavy load.

How to do this:

Have a testing and maintenance contract with a company that specializes in this. They can also assist you with other matter maintenance activities. Look in the yellow pages or speak with other folks who have backup generators — ignoring the folks that say they don’t do anything special to make sure their generator works when they need it of course. 🙂

Things This Solution Should Catch

Some of the causes of the inability to start, that would have been picked up under the above system, that I’ve observed are:

Generator battery fails

Causes: Age, No installed smart charger, Cabling disconnect during maintenance or due to loose connector that is shaken off during generation operation

May have been an accident or the little battery in the ATS running lower (should be checked quarter with a volt-meter and replaced at least every year)

It’s good to be aware of these so that the staff implementing the system can understand the specifics of the problems they’re looking for. They do require a checklist system — something for a junior tech or maintenance person to perform/verify on a regular schedule. These items are easy and even “cheap” both in absolute and ROI terms. I’m reminded of a couple quotes I recently wrote in my journal (credit to Robert Rosenthal for these two sayings):

“If the cheap solution fails, it may be the most expensive option of all.”

“No one ever went to the board of directors and said, ‘The project failed but I’m proud of the fact that we paid next to nothing to implement it.”

I’m into good coffee. I’ve owned my own espresso makers and roasted my own coffee at home, and I rely on a French press for my daily consumption.

Don’t let that fool you though: Most days I’m too lazy or too busy to wear my aficionado hat. That’s why I’m going tell you the least you need to know to experience the joy of better brewed coffee.

There are a million things aficionados will tell you that you “must” do to get a good cup of plain old brewed coffee. It’s unlikely you’ll follow much of that advice (unless you’re obsessed or just deeply interested and willing to dedicate the time and energy to it).

You wouldn’t mind a great cup of coffee (even just slightly better), but you don’t want to put time, energy, or money into it. I get it. Most days I don’t either.

That’s why I’m going to tell you the only thing you need to know to raise the bar a bit on your home (or office) brewed coffee with least amount of effort, distraction, and energy. It’s the pragmatic approach I actually use 99% of the time (despite my occasional deep dives into the dark arts of high-end coffee).

It’ll take one minute to read through, about one minute extra the next time you are at the grocery store, and another minute if you follow my number two suggestion (which can be ordered on-line), and nearly no consumption of your time and energy on an ongoing basis after that.

Store the beans sealed as tightly as possible (exposure to oxygen/air speeds up their deterioration)

Don’t let the brewed coffee sit on the coffee warmer. (Consider a small french press if you don’t mind boiling your own water)

That’s it. Heck, do any one of these and things will get better. Do two or more and, well, you can see how they build on each other.

Bonus tweaks

If you use Half & Half, avoid the ultra-pasteurized variety (it has a more cooked flavor along with other off flavors added as preservatives)

Use the same amount of coffee grounds in your maker regardless of whether you’re making a full pot or not.

Experiment with different bean sources, types, and roasts to find roasters, origins, and roast levels that best match your flavor preferences. It doesn’t have to be $20/lbs coffee. I’ve found decent coffee at local super markets and chain superstores.